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Despite the 65,000 bank unionists threatening to walk off their jobs next week in protest, the government yesterday solidified its vows to keep the preset course of financial restructuring.

Speaking before a group of industrialists and financiers, Minister of Finance and Economy Lee Hun-jai confirmed that the government would not delay or alter its plans for the second phase of financial restructuring.

Adding a vote of confidence to Financial Supervisory Commission (FSC) Chairman Lee Yong-keun's rejection of labor union demands Tuesday, the minister declared, "The basic fundamentals pertaining to the second phase of financial restructuring are non-negotiable." "Consequently, the establishment of financial holding company, mark-to-market bond pricing and partial deposit guarantee systems will be promoted and implemented as planned." Presidents of eight banks including Seoul, Korea Exchange, Kookmin and Peace, attended the meeting sponsored by the Korea Chamber of Commerce and Industry.

"The second round of financial restructuring is designed to give financial institutions the opportunity to raise their international competitiveness," Lee said. "In particular, the financial holding company system will provide domestic institutions with the means to bring themselves in line with global standards and recent trends of expansion in the financial sector."

Furthermore, Lee stressed the urgency in concluding financial sector reforms.

"Although the government is prepared to grant some time for state-held banks to find ways to stand on their own feet, there isn't much time left," said Lee. "Financial institutions need to expedite fortifying themselves so they may attain international competitiveness, because next year's introduction of the partial deposit guarantee system will subject their livelihood to the mercy of market forces," Lee said.

Next year's scheduled implementation of the new insurance system will limit protection to deposits of up to 20 million won per person. This is widely expected to spur a massive flight of deposits from weak banks to strong banks, which the government is betting will send banks scrambling to seek mergers and alliances before next year.

The minister also emphasized the importance of minimizing the government's role in the process.

"The government will strongly urge both banking and non-banking institutions to carry out self-rescue efforts and assume responsibility to conclude the restructuring drive," he said. "To those failing to do so and requiring further public fund injections, market disciplines will be induced and those responsible will be adequately castigated to prevent moral hazards."

Lee added that the government would limit its role to advocating and monitoring sector reforms.

Pertaining to the labor union threat, "Although legitimate criticism will be duly noted, unlawful and violent acts of protests will not be tolerated and will be subject to legal prosecution," warned Lee.

However, the finance minister reiterated the official government stance to maximize efforts of resolving the dispute through talks.